"There is only one power that determines the course of history . . . the power of ideas." — Ayn Rand

Tuesday, June 13, 2017

The Lie Behind the Left’s Drive to Save Dodd-Frank

The Trump Administration’s initiative to reduce economic regulations includes talk of repealing the Dodd-Frank bank regulation bill dumped on the financial sector in response to the 2008 financial crisis. Predictably, the statists are circling the wagons to defend the law, engaging in the usual kinds of hysterical language and distortions Leftist politicians usually use whenever anyone suggests any reduction in taxes or regulations.

Once again, House Republicans have taken up hatchet and torch with the intention of slashing and burning a crucial governmental institution meant to provide protections and safeguards for the wellbeing of all citizens.

The so-called "Choice Act" which, the House Committee on Financial Services Chair, Jeb Hensarling (R-Texas 5th Dist.) is eager to move through committee and to a vote, is to Dodd Frank and the Consumer Financial Protection Bureau (CFPB) what the AHCA is to the Affordable Care Act.

This legislation, which President Trump supports, would tear out the legal roots of the CFPB. If enacted, the bill would burn through the bureau's authority and independence to stop bad actors from breaking the law, leaving Wall Street banks and predatory lenders free to rip off consumers with impunity.

New Jersey is home to two members of the House Committee on Financial Services, Rep. Tom MacArthur (R-3rd Dist.) and Rep. Josh Gottheimer (D-5th Dist.), who are hearing this bill this week, have an obligation to the citizens of New Jersey to stop this bill in its tracks.

This destructive legislation proposed by House Republicans would gut the one entity that is holding Wall Street and financial institutions accountable for unfair, deceptive and abusive practices.

I left these comments, somewhat expanded and edited for clarity, with particular focus on the last sentence:

This destructive legislation proposed by House Republicans would gut the one entity that is holding Wall Street and financial institutions accountable for unfair, deceptive and abusive practices.

This is an outright lie. Laws against fraud and deception have long existed. Prosecutions following the 1999 accounting scandals involving Enron and other companies and their executives were based on laws that pre-existed even the Sarbanes-Oxley anti-fraud laws. The real deception is that Dodd-Frank was sold based on a deliberate mis-identification of the fundamental causes of the financial crisis and Great Recession.

The only institution capable of infecting the entire banking and financial system with bad lending is the federal government, through it massive regulatory labyrinth. And that’s exactly what happened. It started in the 1990s. The housing boom and bust, financial meltdown, and Great Recession were engineered from the Washington political establishment—a perfect storm of government intervention.

From the Fed to the FDIC, CRA, Fannie & Freddie and their implied federal mortgage guarantees, the legally protected rating agency cartel, FHA, SEC, FASB accounting regulations, and on and on, the massive federal regulatory apparatus was geared to enforce the politicians’ affordable housing crusade. There is no way the “Wall Street and financial institutions” could have done this. Whatever financial firms acted badly—and many did, such as Angelo Mozilo’s

Countrywide and IndyMac Bank—private sector culpability was a derivative effect, not a primary cause.

The primary causes of the meltdown were government initiated, and have been well documented in books published by experts such as Thomas Sowell, John A. Allison, and Peter J. Wallison. Many articles have been written outlining the true nature and causes of the economic destruction, including “Free Markets Didn’t Create the Great Recession” by Don Watkins. But the statists refused to acknowledge their own primary culpability, and instead opted to shield themselves from blame, protect their own power, and expand their control over the economy—with the help of “progressive” hacks in the media such as the statists over at the NJCA.

We don’t need more protection from Wall Street and financial institutions. We need protection from our protectors—and to hold the real political culprits accountable, starting with Barney Frank, Chris Dodd, Alan Greenspan, Ben Bernanke, Franklin Raines, Bill Clinton, and George W. Bush. We need to ignore articles like this on, and go back to the proverbial drawing boards. Repeal Dodd-Frank. Get honest with Americans. And then enact, revise, or repeal laws that will actually prevent such politically engineered crises from ever happening again, while retaining long-standing fraud protections but otherwise liberating the financial business to do its job of providing capital, savings and investment opportunities, and consumer financing for entrepreneurs and so-called “working families”—i.e., productive people—alike.

About Me

Greetings and welcome to my blog. My name is Michael A. (Mike) LaFerrara. I sometimes use the pen or "screen" name "Mike Zemack" or "Zemack" in online activism, such as posted comments on articles. “Zemack” stands for the first letters of the names of my six grandchildren (I now have seven, so I've also used "Zemack+1"). I was born in 1949 in New Jersey, U.S.A., where I retired from a career in the plumbing, building controls, and construction industries, and still reside with my wife of 44 years. The purpose of my blog is the discussion of a wide range of topics relating to human events from the perspective of Objectivism, the philosophy of reason, rational self-interest, and capitalism originated by Ayn Rand.

As Rand observed: “The professional intellectual is the field agent of the army whose commander-in-chief is the philosopher.” I am certainly not the philosopher. But neither am I a field agent, or general. I am a foot soldier in that Objectivist army that fights for an individualist society in which every person can live in dignified sovereignty, by his own reasoned judgment, for his own sake, in that state of peaceful coexistence with his fellow man that only capitalist political and economic freedom can provide. While I am a fully committed Objectivist, my opinions are based on my own understanding of Objectivism, and should not be taken as definitive “Objectivist positions.” For the full story of my journey toward Objectivism, see my Introduction.

One final introductory note: I strongly recommend Philosophy, Who Needs it, which highlights the inescapable importance of philosophy in every individual's life. I can be reached at mal.atlas@comcast.net. Thanks, Mike LaFerrara.

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Quotes I Like

Let me give you a tip on a clue to men’s characters: the man who damns money has obtained it dishonorably; the man who respects it has earned it. Run for your life from any man who tells you that money is evil. That sentence is the leper’s bell of an approaching looter.—Francisco d'Anconia

I love getting older...I get to grow up and learn things. Madalyn, 5 years old, Montesorri student, and my grand-daughter

The best thing one can do for the poor is to not become one of them. Author Unknown

Nature, to be commanded, must be obeyed. Francis Bacon

Freedom is never more than one generation away from extinction. Ronald Reagan

Thinking is hard work. If it weren't, more people would do it. Henry Ford

Intellectual freedom cannot exist without political freedom; political freedom cannot exist without economic freedom; a free mind and a free market are corollaries. Ayn Rand